Jones v Murrumbidgee Irrigation Limited (No 2)

[2020] NSWSC 613

Supreme Court

New South Wales

Medium Neutral Citation:

Jones v Murrumbidgee Irrigation Limited (No 2) [2020] NSWSC 613

Hearing dates:

9 – 13, 16 – 20, 23 – 27 September 2019; 17 – 18 December 2019

Date of orders:

22 May 2020

Decision date:

22 May 2020

Jurisdiction:

Common Law

Before:

Wright J

Decision:

(1) Judgment for the defendant.

 (2) The plaintiffs are to pay the defendant’s costs as agreed or assessed.

Catchwords:

AGRICULTURE – Rice growing – Landforming by cutting and filling – Water management – Irrigation bay layout – Urea and nitrogen – Bloodworms dead or alive – Turbidity – Remediation and flocculation

 

CONTRACTS – Implied terms – Breach of contract – Whether quality of water supplied by irrigator to farmer was contaminated or unfit to be used for irrigation in breach of contract – Deoxygenated water – Ca:Mg ratio of water – Metal toxicity and monosulfidic black ooze – No breach of contract in the circumstances

 

NEGLIGENCE – Duty of care – Whether duty of care limited by contractual limitation of liability clauses – No breach of duty in the circumstances

  TRESPASS – General principles – Wrongful depositing of harmful solids on land as a result of turbid water – Whether consent to entry of turbid water onto land – Where landholder ordered delivery of water and opened outlets to permit entry of turbid water – Trespass not established in the circumstances

Legislation Cited:

Civil Liability Act 2002 (NSW)
Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law
Irrigation Corporations Act 1994 (NSW)
Limitation Act 1969 (NSW)
Protection of the Environment Operations Act 1999 (NSW)
Sale of Goods Act 1923 (NSW)
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Water Management Act 2000 (NSW)

Cases Cited:

Alstom Ltd v Yokogawa Australia Pty Ltd (No 7) [2012] SASC 49
Astley v AusTrust Ltd (1999) 197 CLR 1; [1999] HCA 6
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51; [2003] HCA 18
Barker v The Queen (1983) 153 CLR 338; [1983] HCA 18
Blacktown City Council v Hocking [2008] NSWCA 144
Boucher v Murray Irrigation Limited [2017] NSWSC 1268
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14
DC v State of New South Wales [2016] NSWCA 198
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Goode v Angland (2017) 96 NSWLR 503; [2017] NSWCA 311
Gregory v Piper (1829) 9 B&C 591; 109 ER 220
Hawkesbury Sports Council v Martin [2019] NSWCA 76
Henderson v Merrett Syndicates Ltd [1995] 2 AC 145
Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15
Jones v Murrumbidgee Irrigation Limited [2019] NSWSC 1228
Kynoch Ltd v Rowlands [1912] 1 Ch 527
Lawrence v Ciantar [2020] NSWCA 89
Park v Murray Irrigation Limited [2018] NSWCA 166
Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36
Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v Deputy Commissioner of Taxation [2017] NSWCA 81; 105 ATR 431
Taitoko v R [2020] NSWCCA 43
Taupau v HVAC Constructions (Queensland) Pty Ltd [2012] NSWCA 293
Wallace v Kam (2013) 250 CLR 375; [2013] HCA 19

Category:

Principal judgment

Parties:

Sally Patricia Jones (First Plaintiff)
Yambiana Pty Ltd trading as Yambiana Australia (Second Plaintiff)
Murrumbidgee Irrigation Limited (Defendant)

Representation:

Counsel:
M Scott with M Connor (Plaintiffs)
J Steele with J Thompson (Defendant)

  Solicitors:
Mackenzie & Vardanega (Plaintiffs)
Thompson Cooper Lawyers (Defendant)

File Number(s):

2015/337197

TABLE OF CONTENTS

Background

North Corynnia - paragraph 4

MI’s background, corporate structure and contracts relating to delivery of irrigation water

MI background - paragraph 13

MI corporate structure - paragraph 20

Contracts relating to the delivery of irrigation water in the MIA - paragraph 22

Delivery of irrigation to North Corynnia and adjoining properties - paragraph 34

Rice Growing in the MIA - paragraph 57

Plaintiffs’ rice growing expert and other evidence - paragraph 63

Mr Hutchins - paragraph 65

Mr Cave - paragraph 84

The defendant’s rice growing experts and other evidence - paragraph 87

Mr Lacy - paragraph 88

Prof Meyer - paragraph 93

Mr Hedditch - paragraph 99

Concurrent evidence on rice growing - paragraph 102

Rice growing in the MIA – general findings - paragraph 104

Landforming and soils - paragraph 106

Rice sowing and initial water management - paragraph 108

Turbidity, or muddiness, of the irrigation water - paragraph 110

Seedling growth after germination and water management - paragraph 113

Bloodworms - paragraph 118

Importance of nitrogen to rice crops - paragraph 124

Cyanobacteria - paragraph 129

North Corynnia – paddocks P14, P15 and Q13 in 2003 - 2009 - paragraph 130

Landforming and development at North Corynnia 2003 – 2009 - paragraph 133

2009/10 rice crops on P14, P15 and Q13 - paragraph 143

The lay evidence in relation to the 2009/10 rice crops - paragraph 144

The evidence called by the plaintiffs presented considerable difficulties - paragraph 147

The defendant’s evidence - paragraph 168

Background to Ms Jones’s 2009/10 rice crops - paragraph 174

The Reiziq rice crops from 23 October 2009 to 23 December 2009

Contracting for the first 50 ha of Reiziq - paragraph 182

Sowing the first 50 ha of Reiziq - paragraph 183

Application of water to the first 50 ha of Reiziq - paragraph 187

Contracting for the next 20 ha of Reiziq - paragraph 189

Sowing the next 20 ha of Reiziq - paragraph 190

Further application of water to the Reiziq crops - paragraph 192

Initial progress of the Reiziq crops - paragraph 194

Mr Cave’s recommendations in late November 2009 - paragraph 199

Spraying and fertilising the Reiziq crops and the application of permanent water - paragraph 202

State of the Reiziq crops on 20 December 2009 - paragraph 211

Watering and dewatering of the Reiziq crops - paragraph 223

Mr Hedditch’s inspection of the Reiziq crops - paragraph 228

Mr Hutchins’s inspection of the Reiziq crops on 23 December 2009 - paragraph 230

Findings as to the state of the Reiziq crops on 23 December 2009 - paragraph 245

Prospects for the Reiziq crops on 23 December 2009 - paragraph 246

The Illabong rice crop from 28 November 2009 to 23 December 2009

Contracting for the Illabong crop - paragraph 249

Sowing the Illabong crop - paragraph 252

First application of water to the Illabong crop - paragraph 253

Lack of observed germination of the Illabong crop - paragraph 261

Second application of water to the Illabong crop - paragraph 265

Dewatering of the Illabong crop - paragraph 268

Mr Hedditch inspected the Illabong crop - paragraph 271

Mr Hutchins inspected the Illabong crop on 23 December 2009 - paragraph 274

The Illabong crop was abandoned on 23 December 2009 - paragraph 284

Ms Jones’s first complaint to MI and inspections - paragraph 285

Inspection on 29 December 2009 - paragraph 292

Weeds in the Corynnia Channel - paragraph 294

The Illabong crop - paragraph 296

The Reiziq crops - paragraph 298

Bloodworms in the Reiziq crops - paragraph 301

Ms Jones’s very unsatisfactory evidence concerning bloodworms - paragraph 305

Assessment of the rice crops as at 29 December 2009 - paragraph 313

Ms Jones emailed Mr Hutchins on 30 December 2009 and provided plant samples - paragraph 316

Ms Jones’s second complaint to MI - paragraph 318

Water testing by MI in response to the second complaint - paragraph 319

Ms Tijs’s conversation with Mr Hutchins - paragraph 320

Inspection on 4 January 2010 - paragraph 321

Ms Jones visited her neighbour Mr Williment on Bundarra on 4 January 2010 - paragraph 330

Ms Tijs’s conversations with neighbouring rice farmers on 4 January 2010 - paragraph 333

Water samples taken on 5 January 2010 - paragraph 337

Rewatering of the Reiziq crops - paragraph 339

Test results for the MI water samples - paragraph 340

Mr Cave identified a bloodworm problem on 11 January 2010 - paragraph 345

On 13 January 2010, treatment for bloodworm and fertilising - paragraph 346

On 13 January 2010, another inspection by Mr Hutchins - paragraph 349

Abandonment and termination of irrigation of the Reiziq crop on 19 and 20 January 2010 - paragraph 355

Mr Hutchins’s inspection on 21 January 2010 - paragraph 358

Prof Meyer’s analysis of where the Reiziq crops suffered damage - paragraph 371

The Neighbours’ crops in 2009/10 - paragraph 375

Mr Williment’s rice crop on Bundarra - paragraph 378

Mr Armstrong’s sorghum crop on Corynnia Station - paragraph 383

Star Brothers’ rice crop on Dry Lake - paragraph 386

Undershot and overshot regulators - paragraph 394

The absence of problems experienced by Ms Jones’s neighbours - paragraph 397

Investigations by Ms Jones from January to June 2010 - paragraph 399

Mr Hutchins’s June 2010 report - paragraph 406

Introductory sections 1 to 5 - paragraph 408

Sections 6, 7 and 8 - paragraph 409

Section 9 - paragraph 411

Salinity and pH of the water - paragraph 416

Herbicides in the water - paragraph 417

Deoxygenation of the water - paragraph 419

Metals - paragraph 452

Section 10 - paragraph 486

Section 11 - paragraph 490

Section 12 - paragraph 502

Section 13 - paragraph 511

Sections 14, 15 and 16 and the December 2016 report - paragraph 515

Other potential causes of the problems not considered - paragraph 517

The internal water supply channels on North Corynnia - paragraph 521

Mr Hutchins’s limited consideration of Ms Jones’s neighbours’ successful crops in 2009/10 - paragraph 549

Mr Hutchins did not differentiate between the Reiziq crops and the Illabong crop in reaching his conclusion - paragraph 555

Conclusion concerning Mr Hutchins’s June 2010 and December 2016 reports - paragraph 562

Ms Jones’s further steps and investigations in August 2010 - paragraph 563

Further water use in and after 2010 and sale of water entitlements - paragraph 576

Soil and water experts - paragraph 582

The plaintiffs’ soil and water experts

Prof Cook - paragraph 590

Mr Mulvey - paragraph 614

MI’s soil and water experts - paragraph 620

Prof Meyer - paragraph 621

Prof Bush - paragraph 623

Prof Cook retained in late 2011 or early 2012 - paragraph 632

Prof Cook’s April 2012 report - paragraph 634

What Prof Cook was tasked to consider was not supported by reports that were in evidence - paragraph 635

The specific matters Prof Cook sought to explain were not established on the evidence - paragraph 639

Prof Cook’s recommendations in his April 2012 report - paragraph 658

Prof Cook’s investigations in 2013 and 2014 and his August 2015 report - paragraph 659

Testing relied upon by Prof Cook for the August 2015 report - paragraph 665

Prof Cook’s opinion concerning “causation of soil condition and crop failures” - paragraph 671

Prof Cook’s analyses in the August 2015 report - paragraph 673

Turbidity and water related issues - paragraph 676

Ca:Mg ratio - paragraph 686

C:N ratio and low redox - paragraph 699

Conclusion on the opinions in Prof Cook’s August 2015 report - paragraph 710

Prof Cook’s recommendations in his August 2015 report - paragraph 711

Flocculant trial in 2013 to 2016 and steps related to flocculation - paragraph 713

Other “remediation” - paragraph 723

Mr Hutchins’s inspection of North Corynnia in November 2016 - paragraph 729

Mr Mulvey’s 14 February 2017 report and later supplementary report - paragraph 737

Later testing in 2018 and Prof Cook’s April 2018 report - paragraph 757

Prof Cook’s 2018 water testing - paragraph 759

Prof Cook’s analysis of 2018 soil tests - paragraph 762

Prof Cook’s failure to consider whether other water users affected - paragraph 770

Conclusion on Prof Cook’s April 2018 report - paragraph 773

Prof Cook’s 19 November 2018 report - paragraph 775

Mr Hutchins’s inspection of North Corynnia on 21 May 2019 - paragraph 779

Conclusion on “remediation” - paragraph 781

Soil and water experts - paragraph 783

Additional and summary findings concerning the soil and water, Ms Jones’s rice crops in 2009/10 and related matters - paragraph 785

Dispersive nature of the soils and turbidity - paragraph 786

Calcium:Magnesium ratio of the soil and irrigation water - paragraph 791

Deoxygenation and Carbon:Nitrogen ratio - paragraph 799

Iron, aluminium and chloride levels in water delivered by MI - paragraph 806

Acid sulfate soil, monosulfidic black ooze (or MBO) and related matters - paragraph 810

Ms Jones’s 2009/10 rice crops - paragraph 814

The soils on P14, P15 and Q13 and elsewhere on North Corynnia after irrigation - paragraph 820

Remediation and flocculation - paragraph 822

Adequacy of MI water testing - paragraph 823

The plaintiffs’ causes of action, MI’s defence and the plaintiffs’ reply - paragraph 826

The further amended statement of claim - paragraph 828

The defence to the further amended statement of claim - paragraph 829

The further amended reply - paragraph 835

A fundamental problem for the plaintiffs’ case - paragraph 838

Breach of duty of care - paragraph 842

Breach of contract - paragraph 861

Trespass - paragraph 867

Conclusion - paragraph 876

Breach of duty of care and negligence

Duty of care - paragraph 879

A duty of care could arise - paragraph 882

Is any duty of care excluded or limited by the relevant contracts? - paragraph 884

Duty of care in relation to irrigation water supplied in 2009/10 - paragraph 890

Duty of care in relation to irrigation water supplied after December 2011 - paragraph 901

Consequences of conclusions relating to duty of care - paragraph 918

Sections 5B, 5H and 5I of the Civil Liability Act - paragraph 919

Section 5B - paragraph 920

Section 5H - paragraph 933

Section 5I - paragraph 934

Breaches of duty identified by the plaintiffs - paragraph 938

Causation of loss - paragraph 939

Conclusion on breach of duty of care and negligence - paragraph 948

Breach of contract - paragraph 949

The plaintiffs’ submissions - paragraph 950

MI’s submissions - paragraph 954

The issues raised by the plaintiffs to address the limitation clauses - paragraph 957

Consideration of the other issues - paragraph 960

Trespass - paragraph 969

Limitation defence to claims arising before 16 November 2009 - paragraph 970

Damages - paragraph 977

Conclusion - paragraph 983

Judgment

1. Ms Sally Jones, the first plaintiff, and her company, Yambiana Pty Ltd (Yambiana) the second plaintiff, carried and carry on a farming business in the Murrumbidgee Irrigation Area (the MIA) on a property known as North Corynnia. Murrumbidgee Irrigation Limited (MI), the defendant, owned and owns infrastructure for water delivery and drainage in the MIA and was responsible for delivering irrigation water to Ms Jones and Yambiana at the relevant times.

2. Ms Jones and Yambiana have sued MI alleging, among other things, that water delivered by MI to North Corynnia in 2009/10 was contaminated, turbid or otherwise unsuitable for use in irrigation. A major part of the case concerned whether the rice crops on paddocks known as P14, P15 and Q13 failed because of the quality of the water delivered by MI in late 2009 and early 2010 and whether thereafter those paddocks were left contaminated.

3. In order to understand what has occurred on North Corynnia since 2009, it is necessary first to set out some largely non-contentious background to Ms Jones’s and Yambiana’s farming activities and MI’s operations.

Background

North Corynnia

4. North Corynnia is part of a former sheep station, Corynnia, which was purchased and subdivided in 1977 by a consortium of local farming families, including Ms Jones’s family, and then further subdivided by them in 1984.

5. In 1997, Ms Jones’s parents established a family partnership which included Ms Jones, her parents and her sister. That partnership operated approximately 30,000 ha of land in the MIA and had water entitlements amounting to 21,000 megalitres (“ML”). Ms Jones’s father was a pioneer of large-scale irrigation farming and she has been involved in irrigation farming from a young age. After graduating from university with an honours degree in agricultural economics, Ms Jones worked as a farm management advisor in the Murrumbidgee region for two years. Between 1986 and 2002 she worked as an economist, policy adviser and corporate advisor in Australia and overseas. In late 2002, Ms Jones returned to the Murrumbidgee region to assume full ownership of, and responsibility for, a share of the family farming assets.

6. In 2002/2003, Ms Jones was responsible for irrigating the family partnership’s rice crop on a property owned by her parents. In 2003, the process of dissolving the family partnership commenced but it was not concluded until 2007.

7. On 5 March 2003, Yambiana Pty Ltd was incorporated with Ms Jones as the sole shareholder and director. The company was established to separate ownership of the land and water assets from the cropping, livestock and irrigation enterprise on North Corynnia.

8. Ms Jones assumed responsibility for the management of North Corynnia from 2003 onwards. Yambiana conducted the cropping, livestock and irrigation enterprise on North Corynnia by arrangement with Ms Jones. Generally, nothing was said to turn on the fact that the cropping, livestock and irrigation enterprise was conducted through the company. Accordingly, in these reasons, I shall generally not refer to Yambiana separately. References to Ms Jones should be understood as referring to or including the company, where appropriate.

9. In 2007, Ms Jones became the registered proprietor of the land included in North Corynnia, although she previously held a beneficial interest in this land.

10. North Corynnia is a large-scale irrigation, farming and grazing property and covers approximately 3,386 ha. Since 1984, North Corynnia has been divided into five adjoining irrigation blocks and, further to the south, three adjoining blocks of grazing land with stock and domestic water supply. These three more southerly blocks are also known as Glencory. Each block is allocated a separate identifier by MI. These are as follows:

MI identifier	Block name	Type of block	Property name
HR30H	30H	Irrigation	North Corynnia
HR30P	30P	Irrigation	North Corynnia
HR30Q	30Q	Irrigation	North Corynnia
HR30M	30M	Irrigation	North Corynnia
HR30D	30D	Irrigation	North Corynnia
32A	32A	Grazing	Glencory
32D	32D	Grazing	Glencory
32E	32E	Grazing	Glencory

11. The blocks relevant to these proceedings, including in particular blocks 30P and 30Q, are shown in maps 1, 2 and 3, which are reproduced at the end of these reasons. The five irrigation blocks are outlined in yellow on maps 1 and 2 and are labelled “Jones”. On map 1, the paddocks P14, P15 and Q13 within blocks 30P and 30Q, respectively, are labelled. The three maps also show other relevant features and information which will be explained later in these reasons.

12. In 2003, when North Corynnia (including Glencory) was established as a single farming unit, for the purposes of MI, it had a base allocation of 8074 ML of water. As the owner of North Corynnia, Ms Jones currently holds 6011 ML of water delivery entitlements and 3011 ML of water entitlements and 11 ML of stock and domestic water entitlements. In addition, Ms Jones is entitled to 194 ML of water rights for use on North Corynnia, known as “Internal Surplus [History of Use] Water Rights”. Corresponding to the water entitlements, Ms Jones currently holds 3,022 B class shares in MI.

MI’s background, corporate structure and contracts relating to delivery of irrigation water

MI background

13. The MIA was established in 1912 following construction of Burrinjuck Dam, Berembed Weir and 139 km of canals. The governing body of the MIA for the first 84 years was the Water Conservation and Irrigation Commission. The MIA remained a State Government entity until 1999 when it was privatised. Since privatisation the irrigation network has been owned and operated by MI, the shareholders of which are mostly landholders in the MIA. Thus, the members of MI are also its customers.

14. At the relevant times, MI has served over 3,200 land holdings owned by over 2,300 shareholder/customers within an area of approximately 370,000 ha. To do this, MI has operated over 1,700 km of supply channels and 1,600 km of drainage channels. Of the supply channels, around 250 km are cement lined, 100 km are piped and the remainder are earthen channels.

13. MI held and holds various licenses and approvals under the Water Management Act 2000 (NSW) which authorise it to carry on the business of delivering water to its customers and performing the functions of an irrigation corporation. MI delivers water to its members and customers via its network of channels and storages, chiefly in support of irrigated agricultural and horticultural industries in the MIA.

14. In particular, MI was and is licensed by the New South Wales Government, by way of Water Access Licences (WALs), to divert water from the Murrumbidgee River and deliver it to customers.

15. When MI wishes to obtain water diverted from the river, it places an order in advance with WaterNSW, the NSW government’s bulk water supplier and river operator. The ordered quantity of water, if approved and delivered by WaterNSW, is then debited from MI’s water allocation account under MI’s relevant WAL. There is a lag time while water released from dams travels down the Murrumbidgee River to the point where MI can extract it. Accordingly, MI places its orders with WaterNSW based on its forecasts of customers’ requirements for water within the MIA.

16. There are two river offtakes available within MI’s system: the Bundidgerry Offtake associated with Berembed Weir near Narrandera which feeds water into the Main Canal; and, another offtake associated with Golgeldrie Weir near Leeton which diverts water into the Sturt Canal. Water in the Main Canal, taken in this way from the Murrumbidgee River, flows past Griffith and eventually some of that water is diverted into the Mirrool Creek Branch Canal and Mirrool Creek. This is relevant for irrigation water delivered to the region of North Corynnia, which is explained in more detail below.

17. The actual amounts of water which MI was and is entitled to take from the Murrumbidgee River under a relevant WAL depend on the available water determination made by the responsible Minister. These determinations establish the proportion of the share component that is available to the holder of a WAL according to the availability of water. Thus, the amount may be 100% of the share component in years of plentiful water and a much lower percentage in drought years.

MI corporate structure

20. At the time of privatisation in 1999, shares in MI were issued to irrigators by reference to the number and type of water entitlements held by each irrigator, in accordance with Pt 3 Div 2 of the Irrigation Corporations Act 1994 (NSW). Eventually, Ms Jones became the holder of the water entitlements and shares in MI referred to above.

21. Since privatisation, MI’s Constitution has provided for the election and appointment of directors to manage the corporation and other matters relating to its organisation and management. Under the Constitution, MI was and is prohibited from declaring dividends to shareholders. MI is classified for accounting purposes as a not-for-profit entity.

Contracts relating to the delivery of irrigation water in the MIA

22. Initially, MI’s Constitution made provision for the contractual arrangements for delivery of water between MI and its customer/members. Before October 2011, the contract under which holders of water entitlements, such as Ms Jones, obtained delivery from MI of their annual allocation of irrigation water, was an annexure to the Constitution. This contract was defined as the “Member Contract” in cl 1(28) and, under cl 137.2 of the Constitution, members of MI were deemed to have entered into that contract 28 days after a copy of the Member Contract was sent to the member if they took water delivered by MI. Under cl 138.1 of the Constitution, the terms of the Member Contract could be varied by special resolution of the members.

23. For the period from 7 September 2006 to 21 October 2011, the terms of the Member Contract were as set out in the version of the Constitution amended at the general meeting on 7 September 2006. [1] It was agreed that this form of the Member Contract governed the delivery of Ms Jones’s annual allocation of water by MI during the period from 7 September 2006 until 21 October 2011.

    1. Ex 1, pp 185 – 220.

24. As a result of recommendations of the Australian Competition and Consumer Commission and of reforms in relation to water rights and trading in those rights from about 2007, MI was required to take, and took, steps to unbundle the water entitlements that had previously existed into: (a) a right or entitlement to an annual allocation of irrigation water; and (b) a right or entitlement to have a volume of irrigation water delivered to a particular landholding. This unbundling effectively required the Member Contract to be terminated and replaced with two separate contracts for water delivery and water entitlements. These new, unbundled contracts were called a Water Entitlements Contract and a Water Delivery Contract.

25. In order to effect the unbundling, on 13 May 2009 an extraordinary general meeting and share class meetings were held to discuss and vote on proposed changes to MI’s Constitution relating, among other things, to termination of the Member Contract and its replacement with the two new contracts. All resolutions were passed by the requisite majority, other than the resolution which would have permitted MI to pay dividends.

26. On 11 June 2009, MI gave notice to members in relation to varying the Member Contract as envisaged in the resolutions passed in May 2009, in order to permit MI to terminate Member Contracts on condition that MI made an offer to enter into corresponding new Water Entitlements Contracts and Water Delivery Contracts, on terms and conditions determined by MI. The proposed terms of the new contracts were not, however, made available at that time.

27. On 14 August 2009, a general meeting of MI and share class meetings were held and resolutions were passed to allow MI to postpone implementation of the changes authorised by the meeting on 13 May 2009 in order to allow more time to investigate and resolve potential shareholder capital gains tax issues.

28. The postponement lasted for some time and it was not until April 2011 that MI gave notice that the resolutions passed in 2009 would take effect from 1 July 2011. In May 2011 copies of the proposed new contracts were provided to members of MI. There was considerable disquiet among MI’s shareholders and representative bodies, such as the Rice Growers Association, concerning the proposed terms of the new contracts, especially in relation to: variation of the contracts; limitations of liability; and, the power of attorney provisions. As a result, implementation of the 2009 resolutions was further delayed and a number of customer information meetings were held by MI to explain and receive feedback on the proposed new contracts. Ms Jones attended a number of those meetings. At one such meeting on 8 August 2011, Ms Jones was present when a powerpoint slide was shown which stated, in relation to the amendments made to the clauses concerning limitation of liability of MI, that: “Exclusion of liability for negligence has been removed”.

29. On 29 August 2011, MI sent letters to members and customers giving, among other things, notice of termination of their Member Contracts from 21 October 2011 and providing information as to the steps to be taken to make the transition from Member Contracts to Water Entitlements Contracts and Water Delivery Contracts.

30. It was agreed in these proceedings that from 21 October 2011 Ms Jones’s Member Contract was terminated.

31. Ms Jones objected to various terms in the new Water Entitlements Contract and the Water Delivery Contract. As a result, on a date which is not clear, she signed and returned to MI a version of those contracts with various clauses crossed out. In addition, Ms Jones’s evidence was that, at about this time in August to October 2011, she was in dispute with MI in relation to the supply of water that she considered was overly turbid and contaminated and she refused to take any further water from MI or to execute the new contracts at that time.

32. Nonetheless, Ms Jones’s evidence was that as the only source of water that she had for watering livestock was water supplied by MI, “[u]nder duress and in concern for her livestock, [she] received water on 27 December 2011”.

33. For the purposes of these proceedings, it was also agreed that from 27 December 2011, the contracts under which Ms Jones was entitled to receive and received irrigation water delivered by MI were the Water Delivery Contract and the Water Entitlements Contract, in the form unamended by Ms Jones’s crossing out. [2]

    2. Ex 1, pp 371 – 416 and pp 417 – 447.

Delivery of irrigation to North Corynnia and adjoining properties

34. The principal source of water for the irrigation blocks of North Corynnia is the system of channels and related infrastructure operated by MI. A number of witnesses gave evidence concerning the location and nature of these channels and the infrastructure. Where there was any dispute as to these matters, I preferred the evidence of the officers of MI responsible for the management of the channels and infrastructure to the evidence of other witnesses concerning their understanding and partial observations of how the channels and infrastructure operated and their locations and purposes. I did so, not only because the evidence of the relevant officers of MI was more comprehensive, credible, consistent with MI’s public documents and not effectively challenged in cross examination, but also for the reasons given below concerning my caution in relation to the evidence of some of the plaintiffs’ witnesses generally.

35. The MI channels relevant to the present proceedings are shown in blue on maps 1, 2 and 3, with blue arrows indicating the direction of flow of the water in the channel. The names for these channels used in these reasons are as they appear on the labels on map 3. In the evidence, witnesses sometimes used slightly different names for the channels but, where this occurred, the channel being referred to was usually clear from the context.

36. In the part of the MI system shown on map 3, water drawn from the Murrumbidgee River to be used for irrigation enters along Mirrool Creek, in the south eastern corner of the map (near the number 3 on map 3). Water in this part of Mirrool Creek flows north-west into the Wah Wah Main Canal and may find its way into the Barren Box Storage and Wetland or BBSW, as explained below. Water in the Wah Wah Main Canal can continue in the canal, flowing to the north west, or can be diverted into the Outfall Channel, which branches off the Wah Wah Main Canal near the BBSW and flows to the south-west towards North Corynnia.

37. The Barren Box swamp was a natural wetland that originally formed part of, and was fed by, Mirrool Creek. In about 2006, the area was redeveloped into BBSW with a view to improving storage, reducing evaporation and improving water quality. Since redevelopment, BBSW, like Gaul, is divided into three parts: the Active Cell (the darker brown south-western part of BBSW in map 3); the Intermediate Cell (the lighter brown part of BBSW in map 3); and, the Wetland Cell (the remaining north-eastern part of BBSW in map 3).

38. Mirrool Creek, at a pondage area known as “Willow Dam”, can be directed to flow by gravity into the Intermediate Cell through the “Bywash” regulator. Otherwise, water in Mirrool Creek flows into the Wah Wah Main Canal. Water from the Intermediate Cell can be pumped into the Wah Wah Main Canal by a pump station known as “BBS Pumps”. Further downstream on the Wah Wah Main Canal, water can be directed to flow by gravity from the canal into the Active Cell through the “Active Cell Inlet”. Further downstream again, at the head of the Outfall Channel, water from the Wah Wah Main Canal can be directed to flow by gravity into the Outfall Channel through the “Bypass” regulator. Water from the Active Cell can also be siphoned into the Outfall Channel near this point.

39. Structures on both the Active Cell and Intermediate Cell can also feed water into the Wetland Cell and, depending on relative water levels, water in the Wetland Cell can be allowed to flow back out via gravity. The Wetland Cell is not directly connected to Mirrool Creek, the Wah Wah Main Canal or the Outfall Canal.

40. In these ways, water can find its way into and out of the BBSW and into the Wah Wah Main Canal and the Outfall Channel.

41. On the Wah Wah Main Canal, further downstream of the Bypass regulator and Outfall Channel junction, is the “Bardens” regulator, which controls the flow of water into the remainder of the Wah Wah Main Canal. Between Willow Dam and the Bardens regulator are five outlets directly from the Wah Wah Main Canal that lead into individual customers’ farms and which, when operated, can draw water from the Wah Wah Main Canal.

42. The irrigation water for North Corynnia comes through the Outfall Channel. Water in the Outfall Channel can be:

1. water that has been stored in BBSW; and

2. water that comes from the Wah Wah Main Canal and into the Outfall Channel without having been through BBSW.

43. As depicted in map 2, after leaving the Wah Wah Main Canal, water in the Outfall Channel flows south-west then west across Wyvern Station, which is not part of the MIA, and follows, to some extent, the natural watercourse of Mirrool Creek. After the Outfall Channel crosses into Wyvern Station it is possible for water from the Channel 13 Outfall Drain (which is the drain running down the western edge of the blocks south from blocks 50 and 64 shown on map 3) to flow into the Outfall Channel after passing through the Wyvern pondage, which is the darker brown circular area on the eastern side of Wyvern Station just below the Outfall Channel (on maps 2 and 3). After the point where water flowing from Wyvern pondage can enter the Outfall Channel there is a monitoring site known as Barren Box Outfall Wyvern, or BBOW (labelled on map 2).

44. After BBOW, the Outfall Channel continues in a westerly direction until it reaches a structure labelled A on maps 2 and 3.

45. The structures labelled with the capital letters A to N on the three maps are regulators which are used by MI to control the flow and delivery of water in the MIA by diverting or holding water at certain locations. The regulators that control bulk movements of water in the main distribution channels are generally operated by electric or hydraulic systems, but some may be manually operated. Regulators are either “undershot” and “overshot”. An undershot regulator operates by lifting a door in order to release water, thereby creating an opening at the bottom of the channel. An overshot regulator has a door that is lowered in order to release water, thereby creating an opening at the top of the channel, near the water surface. On the three maps, an overshot regulator has an upward pointing arrow next to it and an undershot regulator has a downward pointing arrow.

46. As the arrow indicates, the regulator at A is an undershot regulator. This regulator directs water from the Outfall Channel into the Corynnia Channel. Apart from times of flood, water is not generally released into the other channel between regulators A and L. When water is released into that channel, it generally flows down into the Mirrool Creek Floodway, which is the darker brown area which on map 2 leaves the channel a short distance to the north-west of regulator A and travels south west towards regulator B and beyond that to the west.

47. Water for North Corynnia flows from the Outfall Channel into the Corynnia Channel at regulator A and then towards regulator B.

48. Just before regulator B (shown on map 2) are structures labelled “MO-5-HR30E-01” and “MO-5-HR30E-02”.

1. The letters “MO” stand for metered outlet. Metered outlets are the gates or structures through which individual farmers take the water delivered by MI onto their land, through pipes or channels. Until about 2006, mechanical Dethridge wheels were used to measure the flow, and hence the amount, of water received by farmers through these outlets. In about 2006, these were replaced by Doppler meters to measure the amount of water delivered. All the metered outlets referred to in the present proceedings are undershot, in that water is allowed to flow into the block by means of a door that is raised, thereby drawing water from the bottom of the channel.

2. The number “5” indicates that the outlet is in the Wah Wah District of the MIA.

3. The letters “HR30E” are the MI identifier for the block at or near which water is being delivered.

4. The numbers “01” and “02” indicate the number of each metered outlet in respect of each block.

5. For the sake of brevity in these reasons, an outlet such as MO-5-HR30E-02 is sometimes referred to as the 30E-02 outlet or the E2 outlet.

49. Water for North Corynnia travels through regulators B, C and F (shown on map 2). Between those regulators there are metered outlets, MO-5-HR30E-01, 02 and 04 and MO-5-HR30T-01, for blocks 30E and 30T. These blocks comprised the property known as Bundarra and are directly to the east of North Corynnia. In 2009/10, Mr Williment grew rice on Bundarra.

50. Near regulators C and F there are short channels flowing south off the Corynnia Channel, labelled Corynnia Channels 1 and 2 respectively.

51. After regulator F, the water for North Corynnia flows through a culvert, designated by the letters “CV” on maps 1 and 2. Near regulator G (shown on maps 1 and 2), the Corynnia Channel bifurcates into:

1. Channel 2 running south and then turning east and then south again (labelled on map 3); and

2. Corynnia Channel 3 running to the north-west then turning west (labelled on map 3).

52. As to Channel 2 (which flows south from near regulator G):

1. immediately after Channel 2 commences to flow south, there are metered outlets MO-5-HR30P-01 and 02. From these Ms Jones can draw water, generally for block 30P;

2. Channel 2 then runs south to regulator I where it turns east then south and, until recently, supplied stock and domestic water to Glencory, which includes block 32A, and to Mr Bruce Armstrong’s cropping and grazing property known as Corynnia Station;

3. At regulator I, Corynnia Channel 4 leaves Channel 2 and flows in a westerly direction towards regulator J. Just before regulator J are metered outlets MO-5-HR30Q-01 and 02, also referred to as outlets Q1 and Q2. From these, Ms Jones can draw water, generally for block 30Q and the westerly parts of block 30P. The relevant parts of these blocks are further divided into paddocks Q11, Q12 and Q13 and P14, P15 and P16, as shown on map 1; and

4. Corynnia Channel 4 ends near regulator J, and the channel turns south and becomes Corynnia Channel 4A which travels farther south and then west through regulator K. Along that channel, after regulator K, are metered outlets for Mr Bruce Armstrong’s blocks 30R and 30S, which form part of Corynnia Station, on the southern side of North Corynnia. Mr Armstrong grew forage sorghum, a small amount of oats and some rye grass in 2009/10 on Corynnia Station.

53. As to Corynnia Channel 3 (north-west from near regulator G) this channel has:

1. near regulator H, metered outlets generally for Ms Jones’s block 30D;

2. near the end of the channel, metered outlets for blocks 30C and 30L (shown on map 1). Block 30L is part of a property known as Dry Lake, which is one of the properties owned by Star Brothers Farming Pty Ltd. Mr Gregory Star is a director of that company. In 2009/10, Star Brothers grew a rice crop on Dry Lake on block 30L; and

3. at the end of the channel, an escape labelled ES-5-384, which permits water to flow onto Dry Lake. Water flows over the escape only intermittently, when there has been a significant rain event or a farmer upstream has ordered water but turned it off earlier than appropriate. In those cases, the additional water has to go somewhere. If it is not released through the escape it may cause the channel to overflow and cause damage by flooding somewhere upstream. Mr Star does not rely on water flowing over the escape to provide water for his rice crops as it is too intermittent. When Mr Star starts a rice season he takes water through the Doppler metered outlets. He keeps them going all the time at a certain rate and rarely varies them unless there is a heat wave coming, or something of that nature, in which case he increases the rate from the outlets.

54. MI customers order water via MI’s “EASYWATER” online water ordering service. Orders can be placed either online or by telephone. When placing an order customers are prompted to identify:

1. Which inlet on their property they want to draw water from;

2. The start time and start date for the water delivery;

3. The duration (in hours or days) over which they want water to be delivered;

4. The flow rate at which they want water to be delivered; and

5. The type of crop to be watered.

55. Water orders are placed in advance, usually at least the day before delivery of the water is required, so that MI is able to ensure there is sufficient water in the relevant area of their network to allow the customer to draw the ordered water.

56. Generally, water is drawn by customers though metered inlets on or near the boundary of the customer’s property. MI measures the water drawn at each outlet for planning and billing purposes. After a customer has drawn water, the relevant quantity of water is then debited from that customer’s water allocation for that season on MI’s water accounting database. The metered outlets are checked by MI on a monthly basis to determine whether the quantity of water drawn by the customer corresponded with what was ordered.

Rice Growing in the MIA

57. Ms Jones’s case is founded upon what occurred in relation to the 2009/10 rice crops grown on paddocks P14, P15 and Q13, within blocks 30P and 30Q on North Corynnia.

58. It is, therefore, helpful at this point to consider the expert evidence concerning rice growing in the MIA and make findings in that regard. The plaintiffs relied upon the expert reports of Mr Hutchins and the defendant relied upon the reports of Mr Lacy and Prof Meyer. In addition, there was evidence from other witnesses who had expertise in the area of rice growing, Mr Cave called by the plaintiffs and Mr Hedditch called by MI, but these two witnesses did not provide expert’s reports, did not participate in the experts’ conclave and did not give evidence concurrently with the other experts.

59. It can be noted that, generally, the experts’ reports were admitted on the following bases:

1. the factual matters not observed by the witness were admitted as assumptions only;

2. summaries of conclusions were admitted as summaries only, not as evidence themselves;

3. argumentative material was admitted only as submission, not evidence; and

4. evidence in relation to sampling and results of testing, not carried out by the witness, was admitted as assumption only.

60. The way in which Mr Hutchins, Mr Lacy and Prof Meyer gave evidence was relevant in making my assessment of their evidence. All of these expert witnesses:

1. provided expert reports;

2. participated in a conclave of relevant experts; and

3. gave evidence concurrently with the other experts, during which the experts were asked a series of questions, in a form agreed between the parties, and each expert responded to each question and was given an opportunity to comment on other experts’ answers, but this concurrent evidence did not involve any further or other cross examination of the experts.

61. It should be noted that Mr Hutchins was also cross examined separately by Ms Steele of counsel, who appeared with Mr Thompson, for MI. By way of contrast, neither Mr Lacy nor Prof Meyer was cross examined separately. During his separate cross examination, Mr Hutchins’s evidence was strongly challenged both generally and in relation to particular opinions. Some of the matters raised in cross examination were significant in forming my assessment of Mr Hutchins’s evidence as a whole. Given the way in which the concurrent evidence session was conducted, the result was that Mr Lacy’s and Prof Meyer’s evidence was largely unchallenged, except when one of the other expert’s disagreed with Mr Lacy or Prof Meyer during the concurrent evidence.

62. While the situation in the present case did not involve Mr Lacy’s and Prof Meyer’s evidence being completely unchallenged, nonetheless their evidence was not challenged in the same way or to the same extent as Mr Hutchins’s evidence. I approached the assessment of the expert evidence in these proceedings bearing in mind relevant aspects of the comments on judicial method set out in Taupau v HVAC Constructions (Queensland) Pty Ltd [2012] NSWCA 293 at [130] – [134] and having regard to the way in which the proceedings were conducted in the present case.

Plaintiffs’ rice growing expert and other evidence

63. The plaintiffs primarily relied upon expert evidence concerning rice growing from Mr Hutchins, who is an agronomist. In addition, however, the plaintiffs called oral evidence from Mr Cave who was an agronomist and sales advisor with MIA Rural Services who provided advice to Ms Jones from 2004 to early 2010.

64. There were significant issues concerning the reliability of the plaintiffs’ expert evidence concerning rice growing.

Mr Hutchins

65. Mr Hutchins, an agricultural consultant and agronomist, provided five reports: four reports dated June 2010, December 2016, 10 December 2018, and 22 May 2019; and, an undated report. The first two reports contain not only Mr Hutchins’s assumptions and opinions but also his observations made on inspections of the 2009/10 rice crop on 23 December 2009, and 4, 13 and 21 January 2010. The December 2018 report was largely a response to the affidavit of Ms Tijs, a witness called by MI, and also related to observations made in December 2009 and January 2010 concerning Ms Jones’s rice crops and those of Ms Jones’s neighbours, which did not suffer from the same or similar problems experienced by Ms Jones. The May 2019 report concerned the state of Ms Jones’s property in May 2019. The undated report was a response to evidence from Mr Lacy, one of MI’s expert witnesses.

66. In each of his reports, Mr Hutchins expressly stated that he had read the Expert Witness Code of Conduct and agreed to be bound by it in compiling his report. He also attached a copy of Sch 7 to the Uniform Civil Procedure Rules 2005 (NSW) to his first three reports. Notwithstanding this, each report contained the following on the front page:

“Disclaimer. Hutchins Agronomic Services makes no representations or warranties as to the accuracy or completeness of the Report and disclaims all liability for all claims, expenses, losses, damages and costs any third party may incur as a result of them relying on the accuracy or completeness of the Report.”

67. When asked about the disclaimer in cross examination, Mr Hutchins said, among other things: [3]

“But I was advised to put that on reports on legal advice. I hope it was correct.”

3. Tcpt, 24 September 2019, p 958(12-13).

68. From this, I was left with a concern as to whether Mr Hutchins appreciated the nature of his duty as an expert witness to the Court and as to the extent to which the Court should or could rely on the accuracy and completeness of his reports. This was one of the reasons, but not the only reason, why, when there was a difference of opinion between Mr Hutchins and other relevant experts, I preferred the other experts’ opinions.

69. In addition, Mr Hutchins received a number of emails from Ms Jones in which she suggested possible lines of argument which could be used by him. For example, in an email of 1 February 2010, Ms Jones, in effect, directed Mr Hutchins to focus on what might be a “sufficient cause” of crop damage rather than his being asked to form his own expert opinions independently based on full information and consideration of all relevant factors. Ms Jones’s email to Mr Hutchins and Mr Cave of 1 February 2010, included the following:

“Please find attached photos I have taken at various times, including on Saturday, showing a pink layer on top of the areas that were irrigated. This may correspond to the precipitation of iron from the water.

Based on reading I have done, what could happen is that a deoxygenated water body could pick up and transport soluble iron, which is potentially toxic to plants (and animals).

…”

Mr Hutchins responded to this email later on 1 February 2010 as follows:

“Thanks Sally I have downloaded a heap of information, which I have yet to digest. . Basically iron in the soil is held in the ferric state … when the soil becomes anaerobic, it converts to ferrous state … which is more soluble & so more available. Later it converts to an amorphous gell, which is highly soluble. We could speculate that were water is held in an anaerobic state for sometime and then released it would contain massive quantities of highly available iron.”

Later on the same day, Ms Jones responded and wrote, among other things:

“Thanks for this.

You are right to be concentrating on the agronomic consequences of high dissolved iron, and hopefully you can incorporate that into your report without too much additional work. Given that the extensive damage occurred from the outlets, it is reasonable to conclude that the iron was in the water when it entered the property. My reading suggests it is unlikely to be iron alone …. However dissolved iron at high concentrations would be sufficient cause, and so I suggest we focus on this.

…”.

70. To a significant extent the opinions expressed by Mr Hutchins corresponded with Ms Jones’s suggestions.

71. In cross examination, Mr Hutchins accepted that he had had conversations with Ms Jones in which she was giving him instructions with respect to his report, what the content of his report might be, or the questions that he might wish to address. [4]

    4. Tcpt, 24 September 2019, p 958(32-36).

72. Material such as this indicated to me that the independence and reliability of Mr Hutchins’s opinions was open to doubt.

73. A further difficulty with Mr Hutchins’s evidence is that it was he who advised Ms Jones to abandon all of her 2009/10 rice crops either in December 2009 and January 2010. In these circumstances, it would be understandably difficult for him to resile from that advice or from opinions which were consistent with that advice when giving his opinion subsequently as an expert in these proceedings, even if there were evidence to suggest his original advice and opinions were wrong or ill-founded. In making this comment, I am not suggesting that Mr Hutchins consciously gave evidence which he believed to be untrue but rather that the subconscious desire to support or vindicate his advice to abandon the rice crops may have influenced the evidence he gave so that it was not entirely independent and reliable.

74. Mr Hutchins’s curriculum vitae (CV) did not establish that he had extensive specialised knowledge in relation to rice growing. The CV indicated that he held a Diploma of Agriculture with Honours from Roseworthy Agricultural College, graduating in 1963. Thereafter until 1982, he was Assistant Horticulturalist at that College, a Rural Officer with the Commonwealth Development Bank in Adelaide, Seed Production Manager with two different companies and Cropping Manager of a property. From 1982 to the present, Mr Hutchins has been a private Agricultural Consultant based at Darlington Point in New South Wales. His CV did not specifically mention that Mr Hutchins had any specific rice growing expertise, whether based on study, training or experience. While I accept that a consulting agronomist in the Riverina from 1982 to the present who has been at some time the Executive Officer of Murrumbidgee Private Irrigators and of Murrumbidgee Valley Water Users’ Association will have some knowledge of rice growing, Mr Hutchins himself gave evidence that he did not consider himself “a great authority on rice production”. [5] Consequently, where his opinions differed from those of experts with greater and more specific study, training and experience in relation to rice growing, I have preferred the opinions of those experts over the opinions of Mr Hutchins.

    5. Tcpt, 24 September 2019, p 922(14).

75. Further, many of Mr Hutchins’s conclusions in his June 2010 report and the later reports were based upon factual information apparently provided to him by Ms Jones or derived from the internet and other sources which could only mean that such information amounted to assumptions made by him for the purposes of giving his opinions. These assumptions were not clearly identified in his reports. Some of these assumptions were not supported by the evidence adduced or the findings, in this matter. Some of the assumptions were inconsistent with the evidence and findings and, in other cases, the test results upon which he relied were incomplete, inconclusive or contrary to what he opined. Specific examples are referred to, where relevant, later in these reasons. As a result, Mr Hutchins’s opinions and conclusions were, in my view, deprived of substantial weight in a number of instances.

76. I was also troubled that Mr Hutchins was not entirely reliable in giving evidence. For example, during the concurrent evidence of the rice growing experts, Mr Hutchins was emphatic on more than one occasion that the plant depicted in a photograph (Figure 9 in the report of June 2010) [6] was not a rice plant. [7] Although another expert, Mr Lacy, identified it as a rice plant, [8] it was only when Prof Meyer, the third expert participating in the concurrent session, pointed out that Mr Hutchins himself had labelled the photograph “Root damage on a rice plant …” that Mr Hutchins conceded that: [9]

“It might’ve been. It wasn’t the one I wanted to show you if it was. Yes, I think you’re right. It probably is. Yep. I’ll go along with that, sorry.”

6. CB5/2128.

7. Tcpt, 26 September 2019, p 1135(15);Tcpt, 26 September 2019, p 1136(35);Tcpt, 26 September 2019, p 1136(39).

8. Tcpt, 26 September 2019, p 1136(41-42).

9. Tcpt, 26 September 2019, p 1136(50) – p 1137(8).

77. A further example of unreliability was Mr Hutchins’s dogmatic evidence concerning the absence of bloodworms from Ms Jones’s rice crops. Although he only inspected the crop on four occasions in 2009/10, he asserted:

“Mr Cave looked at that crop regularly. He's experienced in looking for bloodworm and he didn't find an infestation. I'm not saying there wasn't a single bloodworm there, of course there was, but that's about it. One worm does not make an infestation. There is absolutely no evidence that there was bloodworm in that crop ever.” (emphasis added)

78. In fact, Ms Tijs photographed bloodworm on rice plants pulled out of Ms Jones’s rice crops on 29 December 2009 and Mr Cave identified bloodworm as a problem and recommended treatment for it in his crop inspection report of 11 January 2010. In addition, the root damage on the rice plant Mr Hutchins himself photographed on 23 December 2009 was indicative of bloodworm attack.

79. Mr Hutchins’s evidence also, at times, lacked the precision and objectivity that might be expected of an independent expert. For example, in one of his later reports, dated 22 May 2019, Mr Hutchins stated:

“In Late November and December at Yambiana rice crops were devastated by very poor quality irrigation water that had very high turbidity killed all vegetation in the 26 ha of Illabong rice sown in Paddock Q13 …”.

80. Mr Hutchins’s own descriptions and photographs show that it was not true that “all vegetation” was “killed” on Q13. Further, the evidence did not establish that the irrigation water in late November and December 2009 had very high turbidity. Finally, the photographs of the Reiziq rice crops, grown by Ms Jones in 2009/10, did not appear to depict crops, in mid-December 2009, that had been “devastated”, while by about mid-January, the photographs appeared to show that those crops had become nitrogen deficient, according to other experts.

81. Other examples of Mr Hutchins using absolute, even emotional, descriptions which were not strictly accurate are provided later in these reasons.

82. Mr Hutchins also, at times during the concurrent evidence with the other rice growing experts, appeared to be: attempting to defend Ms Jones’s position rather than give independent expert evidence; or, giving evidence that was not relevant to the issue under discussion to deflect attention from the fact that he agreed with the other experts. [10]

    10. See for example Tcpt, 26 September 2019, p 1126(44) – p 1127(2); Tcpt, 26 September 2019, p 1123(22–47).

83. For all of these reasons, I found that Mr Hutchins’s evidence was required to be treated with great caution both as to factual matters and as to his expert opinions. I generally gave his evidence reduced or no weight and was only prepared to accept his opinions, when they were consistent with the opinions of the other relevantly qualified experts, and his observations, when they were supported by other reliable evidence.

Mr Cave

84. As noted above, the plaintiffs called oral evidence from Mr Steven Cave, an agronomist. From 2004 to 2010, Ms Jones received from Mr Cave agronomic advice in relation to irrigation and other activity to be undertaken on North Corynnia. Mr Cave was not employed or retained by Ms Jones at any point. He was employed by MIA Rural Services. MIA Rural Services supplied agricultural products such as fertiliser, seed and chemicals to farmers, including Ms Jones. As a result of Ms Jones’s buying agricultural products from MIA Rural Services, she was given access, for no additional charge, to Mr Cave’s agronomic advice, which he often provided by way of recommendations on a crop inspection form completed when he inspected crops or paddocks on North Corynnia. As part of providing agronomic advice, Mr Cave advised Ms Jones what products to buy from his employer, MIA Rural Services. On his crop inspection forms, Mr Cave was described as a “Sales Advisor”.

85. Mr Cave did not provide an expert’s report and did not indicate that he agreed to be bound by the Expert Witness Code of Conduct. He was cross examined. To the extent that he gave expert opinions in his evidence, it was generally to explain the advice that he gave Ms Jones in 2009/10 concerning her rice crops. I accept that Mr Cave was genuinely attempting to give evidence of his recollections of his opinions that he held at the time he gave advice to Ms Jones approximately ten years earlier. However, since the advice he provided in relation to how Ms Jones’s 2009/10 rice crops should be managed could be seen, to the extent it was acted upon, as a potential cause of the problems with the crops, he was not a completely independent witness.

86. Where his opinions were not consistent with the opinions of the expert witnesses on rice growing, other than Mr Hutchins, I generally preferred the opinions of those other expert witnesses. I was prepared to accept his factual evidence when it was supported by or consistent with contemporaneous documents or other reliable evidence of what occurred at relevant times.

The defendant’s rice growing experts and other evidence

87. MI relied on expert reports and oral evidence from Mr Lacy and Prof Meyer in relation to rice growing. In addition, MI called evidence from Mr Hedditch, not by way of an expert’s report, but as a lay witness mainly concerning what occurred and his observations in relation to the rice crops in 2009/10. That is not to say, however, that Mr Hedditch, like Mr Cave, did not have significant expertise in relation to rice growing.

Mr Lacy

88. Mr Lacy provided two reports dated 15 June 2018 and 22 March 2019. He had read the expert code of conduct and agreed to be bound by it. There were no limitations or disclaimers concerning the accuracy, completeness or reliability of his reports.

89. Mr Lacy’s curriculum vitae indicated that he held a Bachelor of Agricultural Science from Sydney University and a Master’s degree in Applied Science from the University of Western Sydney, Hawkesbury. His special fields of expertise included rice agronomy. From 1976 to 2003, Mr Lacy was District Agronomist at Finley in the Riverina. During the period from 2003 to July 2011, he was Industry Leader, Rice Farming Systems, with the New South Wales Department of Primary Industry. In 2011, he commenced business as a private Agricultural Consultant.

960. Similarly, it does not appear to me, having regard to the circumstances already mentioned and the matters relied upon by the plaintiffs (which have been summarised above), that MI’s relevant conduct in relation to the unbundling of the water entitlements and the water delivery rights and putting in place new Water Entitlements Contracts and Water Delivery Contracts, or relying on those contracts, should be characterised as involving such a departure from accepted community standards as can objectively be seen to be against conscience: Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15 at [195] and noting also [277]; 356 ALR 440. More specifically, MI consulted widely concerning the terms of the new contracts and modified them in response to the issues raised. In addition, the allocation of risk between MI and its members by means of the limitation of liability clauses in the relevant contracts was not so unreasonable or contrary to accepted community standards as to constitute unconscionable conduct, especially bearing in mind that, if MI was allocated greater risk under the contracts, any increased costs involved in addressing that risk might well have to be borne by the members and customers by way of higher delivery charges and it might affect the value of members’ water entitlements. Further, the risk allocation in the contracts must also be assessed bearing in mind that customers could address some, if not all, of the risks relevant in the present case by adopting well known farming practices, as well as the fact that MI could only deliver the water that it had available to it at any particular time.

961. An illustration of the application of the principles relating to statutory unconscionability and the types of considerations that may be relevant in the context of unbundling water entitlements and water delivery rights is found in Boucher v Murray Irrigation Limited [2017] NSWSC 1268 at [160] ff and on appeal in Park v Murray Irrigation Limited [2018] NSWCA 166 at [138] ff. While it must be acknowledged that those cases did not concern allegations of delivery of unsuitable or contaminated irrigation water, and related to issues and facts which are somewhat different from those in the present case, the cases do not provide any substantial support for the conclusion that MI acted unconscionably in relation to the unbundling of the Member Contract into the Water Entitlements Contracts or the Water Delivery Contracts.

962. Moreover, even if I were prepared to draw an adverse inference concerning MI’s case on unconscionability because MI did not call Mr Tucker to give evidence concerning what occurred at the meetings leading up to the introduction of the Water Delivery Contract and the Water Entitlements Contract and did not adduce in evidence the recordings of those meeting, it would not, in my view, lead to a conclusion that MI had engaged in unconscionable conduct in any relevant respect, in light of circumstances and factors referred to above.

963. As to the contention that MI engaged in misleading and deceptive conduct at the meeting on 8 August 2011, in light of the terms of cll 31.2 and 19.2 which expressly exclude negligence from the releases in those clauses and the other provisions of the Water Delivery Contract and the Water Entitlements Contract, as explained above, I am of the view that the powerpoint slide shown on 8 August 2011, which indicated that liability for negligence had not been excluded in those contracts, was not misleading or deceptive or liable to mislead or deceive in any respect relevant to the present case. Nor do I accept that Ms Jones relied on such a representation, in any event.

964. Finally, in light of my earlier comments concerning the meaning and effect of the limitation clauses, I do not accept that they are void for uncertainty or illegal.

Trespass

969. I have dealt above with the plaintiffs’ claim in trespass and rejected it.

Limitation defence to claims arising before 16 November 2009

970. MI also relied on s 14 of the Limitation Act 1969 (NSW) to contend that, to the extent that the plaintiffs’ claims are based on deliveries of water made before 16 November 2009, the claims were statute barred, the proceedings having been commenced on 15 November 2015.

971. In response, the plaintiffs contended that all of their causes of action accrued after 16 November 2009 and thus were not statute barred.

972. Since I have determined that none of the plaintiffs’ causes of action have been successful, it is not necessary to determine whether any of the causes of action are statute barred. Nonetheless, I make the following observations (assuming for the purposes of this consideration and contrary to my findings that some of the water delivered was unsuitable or contaminated).

973. Each order for delivery of irrigation water on a particular day and each consequent delivery of unsuitable or contaminated water would have given rise to a separate cause of action for breach of contract. The majority of the water was delivered after 16 November 2009. Further, it appears to me that since:

1. there was generally good and even germination of the Reiziq crops, apart from the last bay of P15, and those crops progressed satisfactorily until about mid-December 2009; and

2. the Illabong crop was not watered before 28 November 2009,

no unsuitable or contaminated water was delivered by MI prior to 16 November 2009.

974. Accordingly, any relevant cause of action based on breach of contract by MI delivering unsuitable or contaminated water would have accrued after, and not before, 16 November 2009.

975. Similarly, any cause of action for breach of duty of care as a result of harm caused by unsuitable or contaminated water being delivered would not have accrued until damage was suffered, and this was not before 16 November 2009.

976. Thus, if the plaintiffs had established that MI was liable for breach of contract or breach of duty of care that cause or those causes of action would not be statute barred.

Damages

977. It is well settled that judges should ordinarily determine all factual issues before them to assist the appeal process and obviate recourse to a new trial and this principle is not confined to the assessment of damages for personal injuries: Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v Deputy Commissioner of Taxation [2017] NSWCA 81 at [70]; 105 ATR 431.

978. In the present case, however, the parties made no specific submissions as to the precise quantification of damages. There was no mention of quantum in the plaintiffs’ written submission of 19 November 2010, or in their written submissions in reply of 16 December 2019. In their closing oral submissions, the plaintiffs simply referred to their accounting expert’s report. It was also submitted that that there might be a need for some further evidence or submissions on quantification of loss and damage, in light of the findings made in relation to liability. [124]

     124. Tcpt, 17 December 2019, p 1257(47); p 1258(37).

979. In MI’s written submissions of 3 December 2019, apart from noting the plaintiffs did not address the issue in their closing written submissions, quantum was dealt with as follows at par 277:

“The plaintiffs claim the cost of lost production, expert costs, land remediation, water treatment costs, forced asset sales and land devaluation. Depending on which assumptions are accepted by the Court, on the assumption liability is established, the accounting experts agree that the range of damages is between $3,908,067.69 and $502,919.”

980. Quantum was mentioned in MI’s oral closing submissions. [125] However, the substantive submissions concerned only two of the six potential heads of damage. In relation to remediation of affected land, it was submitted that opinions of Mr Ryan, the plaintiffs’ accounting expert, were based on assumptions which were not supported by any evidence, because that evidence had only been contained in the Rejected EAL Report. In relation to the cost of flocculation, it was submitted that the need for this treatment was not justified on the evidence.

     125. Tcpt, 18 December 2019, p 1348(34) – p 1351(6).

981. Nothing was submitted as to the actual quantification of any of the heads of damage upon which Mr Ryan or Mr Ivey, MI’s accounting expert, opined.

982. In light of the number of permutations which would have to be considered at this stage assuming that an appeal might, in theory, succeed in relation to any number of aspects of this matter, I am of the view it is not helpful or practical to proceed to assess damages at this stage, covering the likely or possible permutations of assumed counterfactuals. Some of the types of difficulties that might be encountered in such an exercise were adverted to, in a different context, in the comments of Basten JA in DC v State of New South Wales [2016] NSWCA 198 at [153] to [158], although his Honour was in dissent in that case. In addition, such an assessment would have to be undertaken without the benefit of detailed submissions based on the specific findings establishing the basis of liability, which would be less than entirely satisfactory.

Conclusion

983. For all of the reasons set out above, the appropriate order is that there be judgment for the defendant.

984. There does not appear to me to be any circumstance which would render it inappropriate to make a costs order in MI’s favour, since it has been successful in these proceedings. Accordingly, I propose to order that the plaintiffs pay the defendant’s costs as agreed or assessed. If either party wishes to make an application for a different costs order, this may be done by notice of motion filed within 14 days of entry of the orders, under r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW)

985. Accordingly, the orders of the Court are:

1. Judgment for the defendant.

2. The plaintiffs are to pay the defendant’s costs as agreed or assessed.

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Endnotes

Decision last updated: 22 May 2020